Standing Committee B

[Mr. Bill O'Brien in the Chair]

Proceeds of Crime Bill

Clause 313 - Source of income

Amendment proposed [this day]: No. 477, in page 181, line 32, leave out subsection (1). 
 Question again proposed, That the amendment be made.

Dominic Grieve: As I was about to say before lunch, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 313 ordered to stand part of the Bill.

Bill O'Brien: If the Committee wishes, clauses 314 to 316 can be taken together.

Nick Hawkins: On a point of order, Mr. O'Brien. Can clauses 314, 315 and 316 be taken separately?Clause 314 Appeals

Clause 314 - Appeals

Question proposed, That the clause stand part of the Bill.

Nick Hawkins: I have only minor points to make about the clause. Will the Minister explain the thinking behind the appeal being made only to the special commissioners? My hon. Friend the Member for Beaconsfield (Mr. Grieve) and I were thinking about that, and we considered whether to table an amendment to the clause that would offer a parallel way of appeal to the High Court. On balance, however, we decided that because some issues will undoubtedly require specific taxation expertise, the Government may be right to leave such matters with the special commissioners. I should be grateful if the Minister would say whether, during the drafting of the Bill, those who advise the Government went through the same thought process, because this part deals with the extension of existing powers and will give the director special extended powers.
 Did the Government consider introducing a role for the High Court? At present they have not, but I wanted to flag up the issue because I can envisage that in another place, some Law Lords with specific expertise may think that there should be the option of a parallel appeal to the High Court, for the protection of the individual. If that were to be considered in another place, it would be helpful to have heard about the Government's thinking in Committee.

Dominic Grieve: The Minister may wish to consider another issue in respect of the clause. In a sense, I was
 pleased that the appeals procedure makes special provision that the
''Presiding Special Commissioner may nominate one or more assessors to assist the Special Commissioners'',
 and that those assessors 
''must have special knowledge and experience of the matter to which the appeal relates''.
 I assume that means that, in the case of a tax matter that has been handled by the director, not the Board of Inland Revenue, there will be—for the purposes of an appeal—special commissioners who have particular or expert knowledge of proceeds of crime issues. I should not think that such people exist at present, so I presume that some steps will have to be taken to train them. Otherwise, the risk is that they will be drawn from within the law enforcement world, which would not be desirable. I sorry not to have tabled an amendment along those lines, but the idea is interesting. I do not expect that that expertise is currently available, because such legal procedure and practice are novel.

Bob Ainsworth: I am urged to put some of our thoughts about the High Court and the assistance of specialist knowledge on the record.
 Clause 314 provides that when the director is exercising his Revenue functions, the right of appeal is to the special commissioners, who are independent and are administered by the Lord Chancellor's Department. They are separate from the commissioners of Inland Revenue and will be separate both from the director of the agency and from the Home Office. 
 The special commissioners will be able to hear appeals from those who have, for example, been the subject of an investigation by the director that has resulted in a no-source tax assessment. The special commissioners will consider the evidence that both parties bring before them and will determine questions of tax liability. There are further rights of appeal from the special commissioners to higher courts. 
 The right of appeal provided for under part 6 is an equivalent right to that enjoyed by taxpayers in their dealings with Inland Revenue. The one exception is that the right of appeal is limited to the special rather than the general commissioners. That is because the special commissioners have the specialised legal expertise that such cases will require. That does not deny the subject any right of appeal, but it directs the appeal to the appropriate commissioners for that type of hearing. 
 The special commissioners may need to be able to draw on specialist advice to hear those cases. The clause therefore provides for the appointment by the Lord Chancellor, after consultation with Scottish Ministers, of assessors with special knowledge and experience of matters relating to such appeal hearings. Such specialists may have particular expertise in financial investigation and valuations, for example. The Lord Chancellor will be responsible for the administration and remuneration of such appointments. 
 The clause will provide a valuable safeguard. It will provide a right of appeal against the director's taxation functions equivalent to that enjoyed by other taxpayers. The hon. Gentleman talked about the High Court. There are rights of appeal to the High Court on points of law, and further rights of appeal to the Court of Appeal and the House of Lords, if leave is granted.

Nick Hawkins: That obviously means an appeal from the special commissioners. It might be helpful to state that in the Bill for the benefit of those who will read about those new provisions in the Bill. The right of appeal from the special commissioners on a point of law is well known to tax practitioners, and to my hon. Friend the Member for Beaconsfield and me. However, we are introducing new powers, and jurisdiction is being widely extended and is bringing such work into a new field. If that is not stated in the Bill, it will contain a clause headed ''Appeals'' which does not mention appeals from the special commissioners, and the matter would be unclear to those reading it.

Bob Ainsworth: I accept what the hon. Gentleman says about what we include and what we do not include. We have said that we want to follow tax practice in its entirety, with the one major exception of tax levied on income the source of which is unknown. As he rightly says, the matter follows a route of which he and the hon. Member for Beaconsfield are aware. I am not sure whether it is necessary to include the details in the Bill. I shall reflect on whether that would help in any way. The Bill follows the route that is currently trodden in those cases.
 There is a right of complaint against the actions of the director of the Assets Recovery Agency. When the director is operating his tax functions, there will be a right of recourse to the parliamentary ombudsman, the Parliamentary Commissioner for Administration, as there is against the actions of Inland Revenue when it operates its tax functions. That is provided for in schedule 8, paragraph 2. Therefore, there is another route to the High Court. 
 The assessors will—I hope—have specialist knowledge. Their expertise will be valuable to the special commissioners during such hearings. We want them to have expertise in financial investigation or value assessment, which might be particularly relevant when the special commissioners are hearing cases that involve no-source tax assessments by the director. 
 Although I am sure that expertise in financial assessment exists, I also agree with the hon. Member for Surrey Heath (Mr. Hawkins) that it will be necessary to develop that if we are to be fully effective in confiscating the proceeds of crime through the powers provided by the Bill. However, that is the kind of expertise that will be sought when sourceless tax assessments need to be conducted.

Dominic Grieve: I am sure that that is right.
 Special commissioners with expertise in taxation have traditionally been drawn from a variety of sources—although they have tended not to be 
 connected with the Inland Revenue, to prevent questions about conflicts of interest from arising. However, it is noteworthy that the Minister has rightly appreciated that different types of special commissioners are now needed, and that raises the issue of how to find people with expertise in fields that have not been developed.

Bob Ainsworth: We are thinking about such issues in connection with financial investigation and value assessment.
 The hon. Gentleman and his hon. Friend asked whether certain matters should be spelled out in the Bill. Confusion could be caused if we were to start to do that where we are not departing from tax law. We have made it clear that the legislation follows normal taxation law, with all its rights of appeal, unless the contrary is stated. I do not want to include things in one part of the Bill that might cause doubt about whether we are following the normal taxation law in all the other parts of the Bill. We could then fall into the sin of omission, unless we were to compile a long list. Therefore, it might be clearer merely to state that the normal procedures will be followed, except in certain areas.

Nick Hawkins: I am grateful to the Minister for his comments. The Bill is already very big, and I understand why he does not want to add much more to it. However, I was first called to the Bar in 1979, and during my career as a lawyer, and my—almost—10 years' service as a Member of Parliament, I have dealt with a lot of legislation. In my experience, most Bills describe the relevant appeal procedures; those are normally set out in full.
 Therefore, the Bill under discussion is a special case. If a lay person—an accountant, for instance, who has not previously dealt with this area of law—were to read the Bill as it stands, he would get the impression that all he could do was appeal to the special commissioner, because there is no mention that he can go beyond that, on a point of law, to the High Court—and subsequently, if necessary, to the Court of Appeal and the House of Lords. As what we are discussing is a new procedure—an extension of the law, with new arrangements—if the appeal clauses were set out in the Bill, that would offer helpful guidance. 
 I have made my point, and the Minister has said that he will consider it, which I welcome. Although the clause stand part debate has been short, it has also been worth while, and I am sure that it will help to inform debate when the Bill passes to another place. 
 Question put and agreed to. 
 Clause 314 ordered to stand part of the Bill.

Clause 315 - Director's functions: transfers of value

Question proposed, That the clause stand part of the Bill.

Dominic Grieve: Before lunch, we touched on this clause when discussing an amendment that suggested a joint authority between the director and the Board of Inland Revenue. I did not pursue that, although the
 Minister will be aware that I indicated interest in this clause, because it may achieve more recovery than the clauses that relate to income tax.
 I also had an interest in the clause when I read the Bill, because it is noteworthy that inheritance tax functions, along with settlements, are singled out as requiring a clause to themselves, unlike the other functions of the Inland Revenue that the director will be able to discharge. I am thinking of capital gains tax, for example, which is referred to only in passing, and is not covered by a specific clause. 
 It would be helpful to have some understanding of examples to which the clause is likely to apply. The Minister may be able to help the Committee and tell us about the background issues. If a person comes into possession of a substantial capital asset and refuses to disclose its provenance or origin voluntarily, the merit of the measure is that one can subject that person to Morton's fork, because he must either explain that the asset was the result of criminal activity, in which case the Bill will enable the director to seize it under part 5 provisions, or claim that it was an inheritance or transfer for value. If it was, it should have been taxed if it fell within the seven-year period, and the director would be able to do that. 
 A safeguard exists for inheritance, in that the transfer is not subject to tax if it falls outside the seven-year period, and a transfer for value might not be subject to capital taxation. Will the provision therefore be easy to evade? Someone could simply put up another person to say that the asset was given as a present. Will the Minister help us? I am no great expert on taxation, and an understanding of how the system will work in practice might be helpful. I have always felt that it is more likely that capital assets rather than income assets could be seized or taxed in this manner. Why do the Government think that the measure would be such an effective tool?

Bob Ainsworth: The clause allows the director to exercise tax-gathering powers in relation to inheritance tax when there are reasonable grounds to suspect that the proceeds of crime have been passed on by gift or bequest. It is required to complete the director's portfolio of tax powers. It is easy enough to imagine cases in which criminals have given away their proceeds of crime or sought to hide them in a trust or abroad. Alternatively, criminals may simply die before the agency catches up with them. The director must be able to pursue the tax consequences of such dispositions of wealth in addition to the tax liabilities that arise as the wealth accumulates.
 The provisions are essentially equivalent to those in clause 311 that involve income tax, capital gains tax and corporation tax. The detail differs, because the taxes involved are structured slightly differently, notably because inheritance tax is charged separately on distinct occasions of transfer—the main one being death—rather than for successive tax years, as is the case for other taxes. The procedural details and the rules for the director's take-up and conduct of cases run parallel to the tax provisions on other Revenue taxes in clause 311, and the same safeguards apply. 
 The hon. Gentleman asks whether the powers will be easily circumvented. He shares my prejudice that fixed assets may be more easily targeted than income. The challenge before lunch was to think of instances in which we would be unable to use some of the other powers relating to income, in which the tax power might be used. All that I can think of is cases in which bank accounts are not used all the time and it can be shown that a regular income is received by a known gangster—from prostitution or protection, for example—but we cannot trace the source, let alone come up with the necessary through investigation that would allow us to pursue the person through civil recovery. In some instances, people have a regular income that can be exposed, but the source cannot be proved—like the hon. Gentleman, I believe that that will be difficult to do in many cases. 
 People who are involved in drug trafficking or other organised crime may, because of the work in which they are involved, be candidates for a relatively low life expectancy. The issue of pursuing their ill-gotten gains beyond the grave may arise more often than it would in the case of Members of Parliament and others who live a more stable life. The clause may be needed far more often than we would imagine if we were thinking about ourselves, because of the dangerous criminal activity in which such people are involved. Therefore, although I accept that possibilities for circumventing the provision exist, as they do for other aspects of the legislation, it is still a necessary tool in the tax-gathering armoury.

Dominic Grieve: The Minister is right. The death rate for drug dealers seems to be rising, and if that continues, inheritances could be sensibly taxed in relation to proceeds of crime. That must be the primary function. I was flagging up an anxiety in that the Bill refers to transfers of value, but unless those transfers take place within seven years before death, they cannot be taxed under inheritance tax provisions. Under other provisions in the Bill they might be seized, but taxing them would be impossible. The provision would apply in the discrete case of the death of a suspected criminal, and would enable at least those assets to be taxed on transfer even if they had a tainted origin—assuming, that is, that they had not been declared in the usual way by the person inheriting them. That might happen, of course, in which case the tax would be collected in the ordinary way.
 I understand the merit of the provision, and I am grateful for the opportunity to have had a discussion, because it highlights the limitations of part 6. That is not to say that part 6 should not be included, but we must not exaggerate the possibilities that it opens up. The Minister has always said that the provision was intended more as a last resort. I shall be interested to see how often it is used. I assume that although there will be issues of confidentiality, statistical information will at least be made available to Parliament, as time goes by, on the extent to which the provision has been used, and the amounts that have been taxed as a result.

Bob Ainsworth: Our intelligence, and the feedback that we have received on the Irish system, is that the taxation provisions are being extensively used.

Dominic Grieve: I had heard that in conversation with staff at the Irish embassy, as I am interested Irish affairs. I have a layman's approach to this matter—I have no specialist knowledge—and I would therefore be interested to understand how the provisions will operate to tax the assets concerned. As the Minister will be aware, I have scratched my head from time to time about how they will work in reality. I shall have to rely on the expertise of those who advise him.
 Question put and agreed to. 
 Clause 315 ordered to stand part of the Bill.

Clause 316 - Director's functions: certain settlements

Question proposed, That the clause stand part of the Bill.

Nick Hawkins: I can be fairly brief in expressing my concerns about the clause.
 In relation to the director's reasonable grounds for suspicion and the service of a notice, would a slightly wider explanation of the settlements concerned be necessary? I appreciate that there is a reference to the Inheritance Tax Act 1984, and, like my hon. Friend the Member for Beaconsfield, I am not an expert on inheritance tax. I once worked as tax clerk in the tax department of Reuters, as a vacation job when I was a student at Oxford, and I picked up little bits of Revenue law as a result. I also had to take a Revenue law paper in my Bar finals. However, I have never practised in Revenue law. If the Minister were to put an explanation on the record, it might help those in another place who may be tax experts. Debates in another place can be assisted if the issue has at least been explored in Committee in this place.

Bob Ainsworth: Again, let us put the position on the record.
 The clause allows the director to exercise inheritance tax powers over criminal proceeds that have been put into a trust—the legal term is ''settlement''. The mainstream inheritance tax powers covered under clause 315 apply when wealth is transferred, and clause 315 consequently requires the director to identify transfers of wealth that he wishes to take under his jurisdiction. Assets in a trust can, exceptionally, be subject to inheritance tax every 10 years simply by virtue of continuing to be held in trust. Therefore, there is a need to supplement clause 315 in the case of trusts, so that the director can say which trusts he wants to get involved with, and for what period. Apart from that technical difference, the basic approach of clause 316, and the safeguards that apply, are essentially the same as for the director's other tax powers. 
 I hope that that helps the hon. Gentleman in terms of identifying the settlements concerned.

Nick Hawkins: Yes, it helps me to some extent. The Minister is right to say that, essentially, we are talking about trusts. That is how I read subsection (1). I hope that the provision will work as intended. As my hon. Friend the Member for Beaconsfield said at the end of his remarks on the previous clause, one would wish this clause well, and hope that it assists the director to
 do his or her job. I am slightly puzzled about how it will do so, but that may be because of my lack of familiarity with the way in which inheritance tax operates in relation to settlements. I am content to allow those who are more knowledgeable to consider it in another place.
 Clause 316 ordered to stand part of the Bill.

Clause 317 - Functions

Dominic Grieve: I beg to move amendment No. 480, in page 183, line 35, leave out paragraph (e).

Bill O'Brien: With this we may take the following amendments: No. 481, in page 183, line 36, leave out paragraph (f).
 No. 482, in page 183, line 37, leave out paragraph (g).

Dominic Grieve: Clause 317 deals with functions. When I read it, I fully understood why the director might take over the functions of the Board of Inland Revenue in so far as it related to income tax, capital gains tax, corporation tax and—just about—national insurance contributions. However, when it came to statutory sick pay, statutory maternity pay and student loans, I wondered what lay behind the provision. Arguing against myself—as, at any rate, the amendment is probing—I acknowledge that administrative matters may have to be taken into account in relation to those elements in deciding the others, but I could not imagine the director taking a great interest in those three areas on their own. The best that I can do is listen carefully to what the Minister has to say, and when I am more enlightened, I may chip in and ask some more questions.

Nick Hawkins: Before the Minister responds, I want to say that I was somewhat less charitable than my hon. Friend the Member for Beaconsfield when we discussed this matter. My initial reaction was that the draftsman must have a vivid imagination concerning the kind of thing that could be the subject of criminal behaviour. Although I have been involved in fraud cases relating to national insurance contributions on one or two occasions during my practice at the Bar, I certainly have not been involved in cases relating to statutory maternity pay or sick pay. It will take a great deal for the Minister to convince me of the relevance of subsection (1)(e), (f) and (g) to the Bill. It seemed to me that a sledgehammer was being used to crack a nut. The provision seemed to fall into the category about which one could say, ''If it is not necessary for it to be there, it is necessary for it not to be there.'' I can just about agree with the inclusion of paragraph (d), on national insurance contributions—although even that is pushing it a bit—but the provision is supposed to be hitting at serious criminal wrongdoing. I find it difficult to understand why paragraphs (e), (f) and (g) should be in a Bill of this sort.

Bob Ainsworth: The hon. Gentleman should not underestimate other people's ingenuity. Some time ago, there was a case that he may have read about in the press, involving individual learning accounts,
 which on the surface was surprising, but it was lucrative none the less. We are talking about serious people involved in serious activities. However, that is not necessarily the reason for the inclusion of the matters under discussion.

Nick Hawkins: I understand why the Minister raises that issue. I was equally concerned, as were all hon. Members, of every party, about the serious fraud involving individual learning accounts. As the Minister has raised it, it would be relevant for me to say that if the Government had taken a bit more notice of some of the concerns raised by my hon. Friends about the way in which the individual learning accounts scheme was set up, they might not have got themselves into quite such a mess. However, I shall not pursue that, as it would be wide of the debate.
 The issue under discussion is taxation powers, which is different from organised fraud by supposed providers of individual learning accounts.

Bob Ainsworth: If the hon. Gentleman is inviting me to believe that he previously flagged up the issues, I would want to look into that in some detail, based on his past record.
 Clause 317 was drafted to provide clarity about which taxation functions the director is to have and which are not appropriate. An important feature during the development of the Bill has been the maintenance of a single, national and consistent taxation system. The amendments would result in a variation from that, as the director would not be able to undertake such taxation functions. It would also be extremely difficult for the director to take on general revenue functions in relation to the subject as an employer, without taking on SSP, SMP and student loans, as they are part and parcel of the PAYE process. To attempt to disentangle such functions from the process would be an unnecessary and time-consuming activity. 
 The clause will provide for the Revenue to carry on with certain functions if that is more appropriate. Even when the director has served notice on the Board of Inland Revenue, the Revenue is not divested of such functions and may continue to operate in the delivery of certain tasks, such as the more resource-intensive routine functions, which will free up the director to focus on using his taxation functions in the best way to contribute to the reduction of crime. 
 When speaking to earlier amendments tabled to clause 311, I said that the Board of Inland Revenue had no role in the tax affairs of a specified person or company to the extent set out in the notice. That is not, in fact, the case: the director and the board may both exercise functions when that is appropriate. I wish to put the record straight so that there is no misunderstanding about the Bill.

Mark Lazarowicz: Will the Minister clarify one point that may deal with the concerns expressed by Opposition Members? Am I right in thinking that the subsection (3) will considerably restrict the sort of widespread use of the Bill that they have described? Will it not provide real protection against the possibility of the Bill being misused as they have hinted might happen?

Bob Ainsworth: My hon. Friend is right. The last thing we want is for the director to wander into areas that are not appropriate to his functions. We have a list of matters for which he may take responsibility. We also have a list of matters for which he should most definitely not take responsibility. It is not our intention to tie the director to dealing with statutory sick pay and other such matters, but they are part of the system. To disentangle them would be a lot worse than dealing with them as they are dealt with now, under the Revenue's procedures. That is our basic argument. The hon. Gentleman said that it would take a tremendous argument to persuade him that such provisions were justified—but the matter is relatively simple, in that those are the areas that it is necessary to include so that the director can pursue his functions.

Ian Davidson: The Minister has explained well why he would keep paragraphs (e), (f) and (g). I understand that most of the roles are covered by the Board of Inland Revenue, but given that corporation tax is listed under subsection (1), should not VAT also be listed? Some complex fraud and financial arrangements will include cheating on VAT. To some extent, VAT will be indistinguishable from income tax, capital gains tax and corporation tax. All such matters should surely be taken together. Will the Minister expand on that?

Bob Ainsworth: My hon. Friend is right. We are giving the director Revenue powers. VAT is not a Revenue function, but a function of Customs and Excise, whose powers are different from those of the Revenue. If we thought it necessary to involve the director in Customs and Excise powers, too, we would have included such a provision in the Bill and we would have had to justify it, but that is not a case that has been made to us.
 As I have said, there is a case for pursuing the proceeds of crime by giving the director Revenue powers. However, VAT and the rest fall under the powers of Customs and Excise, which will continue to use the powers that are appropriate to it. Customs and Excise was consulted when the Bill was being drafted. It had a wide input with regard to what should and should not be included not only in part 6, but in the whole of the Bill. 
 Statutory sick pay, statutory maternity pay and the recovery of student loans may, however, have a bearing on the true tax position of an individual who is the subject of the director's inquiries. For the director to be able to establish the true tax position, he will need to have the full range of general revenue functions.

Nick Hawkins: I was not persuaded by the Minister's first point, but I understand that there may be substance to his second point. Rather than including the existing paragraphs (e), (f) and (g), we could follow the logic of the intervention by the hon. Member for Edinburgh, North and Leith (Mr. Lazarowicz). Will the Minister say why there should not be a new subsection (3)(g) saying that the director should not waste his time investigating the minutiae of statutory maternity pay, statutory sick pay and student loans? That would be another way of addressing the point.

Bob Ainsworth: I do not think that there is a necessity for a new subsection (3)(g) saying that the director should not waste his time. Having taken on the responsibility for the matter, the director has to be able to make an assessment. When the individual concerned is an employer, the director has to be able to take into account the way in which the other issues, as well as income tax, are being dealt with. It is self-evident, therefore, why the list and the safeguard list are written as they are. Clearly, there are areas into which the director should not be required to go, nor would he be wanted there.

Dominic Grieve: This has been an interesting debate. As my hon. Friend the Member for Surrey Heath said, the most cogent argument presented by the Minister is the need for the director to take such issues into account. When a tax assessment is issued, such factors will have to feature when we are dealing with an individual who is, for example, an employer. I can see that argument.
 In the context of taxing money suspected to be the proceeds of criminal activity, it is a fairly far-fetched idea—although still possible—that connected to the criminal activity there would be a legitimate business that provided for statutory sick pay and statutory maternity pay. I am not sure where student loans fit into such an example. However, that illustrates the complexity of the system. 
 Will the Minister give us an assessment of how many staff would have to be transferred from the Inland Revenue to the director's office? I suspect that, to administer the system, that is what would happen, because it does not sound as if only the director and a couple of other people would be needed. In view of the overall complexity of the tax system, it seems more likely that a discrete department would have to be set up. In taxing individuals and companies in that way, the objective is not only to locate particular sums and ask for 40 per cent., but to take into account the complex tax regulations that cover issues such as sick pay and maternity pay in determining the correct figure.

Nick Hawkins: What my hon. Friend rightly says leads me to a further thought. In light of our increasing knowledge about the increasing complexity of the system, might the Minister be forced to review the compliance cost assessment that the Government must provide for all Bills? My hon. Friend and I might want to re-examine that in light of what he has just said.

Dominic Grieve: Perhaps the Minister would like to intervene or comment on that before I finish speaking. My hon. Friend is right, and I hope that the Minister will forgive us for raising the matter in this way. The Bill is Government legislation, and we want it to work, but the more I examine it, the more complicated the Revenue functions seem to be. The Minister may, however, say that the provision has not caused a problem in Ireland, which may be a compelling reason for not worrying about it.

Bob Ainsworth: We spoke earlier about the need for a memorandum of understanding on how the Revenue will work with the director. The jobs involved must be
 done anyway. Therefore, regardless of whether Revenue staff do the routine jobs so as not to involve, and unnecessarily increase the number of, the people working for the director, the director will work the matter out in a common-sense way with the Revenue.
 The hon. Gentleman should not minimise the issues involved. I should have thought that one of the most regular ways in which criminals try to legitimise their income is to set up front companies that employ people, pay statutory sick pay and do all the other things that companies must do. That is exactly how such activity goes on, and will be found out.

Dominic Grieve: The Minister is right, and I do not disagree with his analysis. However, he may agree that if a criminal sets up a front company for the purpose of laundering his assets, and the director cannot seize those assets under part 5 or the confiscation provisions in part 2, the mere fact of setting up a front company would normally imply that the criminal involved is prepared to pay tax in the ordinary way to the Board of Inland Revenue. However, we are discussing the director's use of taxing powers in order to tax money that in ordinary circumstances might be expected to escape the attention of the Board of Inland Revenue. I may have misunderstood the matter, but that is what I would normally assume lay behind the provision.
 I accept that, as the Minister said earlier, as the director will focus on criminality and the proceeds of crime, he may turn his attention to a front business that is not only fuelled by ''funny money'' but does not pay tax properly. On the whole, history has shown that many people who engage in criminality do not pay their taxes, and try to minimise or evade tax generally, as well as having acquired their money unlawfully and illegitimately in the first place. I do not believe that there is a great deal between us, but if a business exists, the Board of Inland Revenue will try to tax it and will take all those factors into account.

Bob Ainsworth: Yes, but the most relevant point is the focus. There are many small businesses in my constituency, and as long as they order their affairs so as not to draw undue attention to themselves, the Revenue will not single out a particular shop or small business that fronts a scam and launders money derived from it. However, the director may get there, because of other intelligence that he has. The main issue is the focus.

Dominic Grieve: The Minister is right.
 I have a cottage on the River Thames, and when I am staying there, I occasionally notice moored in the local marinas very large pleasure craft that never seem to do very much. They change hands from time to time, and I do not suppose that I will be spilling the beans if I mention that there are anecdotal rumours that money is often laundered by acquiring and selling those large assets. Such transactions might generate capital gains tax, for instance. 
 Large pleasure craft— 
Mr. Davidson rose—

Nick Hawkins: Do they have drawing rooms?

Dominic Grieve: I do not know, but as they are often described as gin palaces, I suspect that a drawing room is the last thing they would have.

Ian Davidson: I was going to ask what the rate of exchange was between a cottage on the Thames and sheep and cattle? How many sheep and cattle did the hon. Gentleman's relatives have to steal to fund the purchase of his ill-gotten gain? Will the Minister consider whether his cottage can be reclaimed by the state?

Dominic Grieve: My family benefits from the fact that its more nefarious activities were brought to an end by the union of the crowns in 1603. I am glad to tell the hon. Gentleman that as a result of that of that union, the people in the borders who were not deported to Northern Ireland, or, subsequently, to America—and who were not hanged, either—succeeded in transforming themselves into legitimate business men. That happened such a long time ago that even I would find it difficult to distinguish, for the benefit of the hon. Gentleman, between the assets that I own that are derived from criminality, and those that have subsequently been lawfully acquired.

Ian Davidson: Is that the case for the defence?

Dominic Grieve: I return to the debate on the clause.
 The Minister has persuaded me that I must not interfere with statutory sick pay, maternity pay or student loans, although I will be interested to see how those provisions work in practice. However, I am conscious of my own ignorance, and if those who sit in the other place have greater expertise, they will be able to draw on our discussion to point out any deficiencies that they identify in this part of the Bill. 
 I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Clause 317 ordered to stand part of the Bill.

Clause 318 - Exercise of Revenue functions

Question proposed, That the clause stand part of the Bill.

Nick Hawkins: The clause addresses the exercise of Revenue functions. Subsection (1) splits up the general Revenue functions and the Revenue inheritance tax functions, and my hon. Friend the Member for Beaconsfield and I have expressed concerns about the way in which the inheritance tax provisions operate. I do not want to reopen that debate, but I wonder why it is necessary to split those functions between separate paragraphs.
 I also want the Minister to clarify something. Concern has long been felt about extra-statutory concessions made by the Revenue—as I know from my own work at the Bar, although I do not have specific expertise in that field. Subsection (3) rightly states that the director is bound by 
''(a) any interpretation of the law which has been published by the Board''
 and 
''(b) any concession which has been published by the Board and which is available generally to any person falling within its terms.''
 Does paragraph (b) refer to all of what are called the extra-statutory concessions made by the Revenue, or is there some significance in the extra words? They appear to provide a condition that would be available to anyone who falls within the terms? 
 I ask that question because some extra-statutory concessions are made only to certain classes of persons. An example of that—which will be particularly familiar to my hon. Friend the Member for Beaconsfield, the hon. Member for Wellingborough (Mr. Stinchcombe) and me—is that extra-statutory concessions were adopted for many years in relation to practising barristers. That is the kind of thing that would always get the goat of the hon. Member for Glasgow, Pollok (Mr. Davidson). 
 Will the Minister tell us more about extra-statutory concessions?

Bob Ainsworth: That is the one to pay for wigs and gowns. Once upon a time in the car industry, I enjoyed a sharp tool allowance; I did an honest day's work for my remuneration then.

Ian Davidson: When you were a Whip.

Bob Ainsworth: Clause 318 requires the director of the agency to apply the taxation system in the same way as the Board of Inland Revenue. He must apply the material published by the board on the interpretation of the law and the extra-statutory concessions. He must also take account of any other material published by the board. The important effect of that is the maintenance of a single, national and consistent taxation system. Without the provision, the Board of Inland Revenue and the director might apply different interpretations of tax law.
 The clause also limits the delegation of taxation functions by the director to his staff, rather than to anyone else who provides him with services. It will send out the important message that the director will apply tax law in the same way as the Board of Inland Revenue. That reinforces the point that taxation will be applied fairly and equally to everyone. 
 The hon. Member for Surrey Heath mentioned his continued concern that inheritance tax is signified separately from other taxation provisions. That is a purely technical necessity. Inheritance tax has not been singled out in any way. The structure of current legislation is the reason why the Bill was drafted in that way.

Nick Hawkins: I am grateful to the Minister. I accept his second point; I was simply asking for clarification about inheritance tax.
 In connection with the extra-statutory concessions, I was fascinated to hear about the Minister's sharp tool allowance. Clearly, I must research that further. [Interruption.] I did not hear what the hon. Member for Glasgow, Pollok said, so I shall give way to him.

Ian Davidson: You still don't get the point.

Nick Hawkins: I am not sure whether the Minister fully answered the question about whether some extra-statutory concessions that do not apply generally would apply here. I understand that the director will work in exactly the same way as the Inland Revenue
 does at present. That is fine. That will be on the record in Hansard, and will help any person who wishes to rely on an extra-statutory concession in the future.
 Question put and agreed to. 
 Clause 318 ordered to stand part of the Bill.

Clause 319 - Declarations

Question proposed, That the clause stand part of the Bill.

Dominic Grieve: May I deal with this clause and schedule 5 at the same time? That will avoid any need for a substantive debate on schedule 5.
 Clearly, the oaths provided in schedule 5 are designed to ensure that the same degree of confidentiality will apply as the Minister explained applies to the Inland Revenue generally. What problems will be caused by the taxation functions of the Assets Recovery Agency being discharged by staff who might perform the other functions of the agency, too? 
 The Inland Revenue's status and reputation for confidentiality is substantially based on the fact that it is a discrete organisation. I know that we talk about Chinese walls in solicitors' firms when there may be conflicts of interest. However, I wonder how the process has been thought through in practice. If staff are interchanged to perform the different functions of the Assets Recovery Agency, it could cause problems. I wonder if the Minister and his advisers have given any thought to ensuring that such problems do not arise.

Bob Ainsworth: Clause 319 requires the director and his staff to make a declaration of non-disclosure of taxpayer information. The text of the declarations that they must make is set out in schedule 5. The declarations are similar in wording to those that the law requires the commissioners of Inland Revenue, and Inland Revenue staff, to make. They will place the agency on an equivalent footing to the Inland Revenue in relation to the confidentiality of taxpayer information. The Inland Revenue has always given great importance to the confidentiality of such information, and it follows that that information should not be vulnerable to inappropriate disclosures just because it is held by the Assets Recovery Agency.
 The declaration states that the person who signs it will not make any disclosures of information that they receive through their functions under this part of the Bill. The exceptions to the rule are disclosures made for the purpose of carrying out the functions, for the purposes of a prosecution for any offence relating to inland revenue, or in any other such cases required or permitted by law. 
 I do not know what more we can do. The hon. Gentleman mentions a difficulty that can be dealt with only if we get the right culture into the new agency. I am sure that the Revenue has struggled with the issue. 
 It has, over a long period, built a reputation. The hon. Gentleman is right to say that it is aided by having a discrete function. I do not believe that the agency will always have specialist staff who deal only with taxation, although that may be the case to some extent. It will certainly help the staff to stick to the declarations that they are required to make. 
 I do not believe that we can make any more provision within the Bill to ensure that the same standards apply to the staff of the agency as to those of the Revenue. That will require effective management and the establishment of the kind of culture that we want, which will lead not only to the expertise necessary to ensure that some of the Bill's powers are used well, but also to the maintenance of the confidentiality that we want people to expect. 
 Clause 319 ordered to stand part of the Bill. 
 Schedule 5 agreed to.

Clause 320 - Interpretation

Nick Hawkins: I beg to move amendment No. 484, in page 185, line 13, at end insert—
'(1A) Nothing in this section may be construed to permit investigation of matters which do not constitute offences within the United Kingdom.'.
 My hon. Friends and I tabled the amendment because of a debate—indeed, more than one debate—that we had not long before Christmas. The Minister will recall it well. The Opposition expressed grave concerns about the Government's proposals for the so-called European Union arrest warrant. In the light of the concern expressed not only by Opposition Members but by the media—extensively, in some quarters—it is important that we do not allow matters that are not offences under UK law to form the basis for instant arrests on the order of a foreign court. 
 I would be out of order if I tried to repeat our extensive debates on the EU arrest warrant. Nevertheless, we want it made clear in the Bill that we are not including things that are not offences in British law. We are suspicious that the Government constantly follow a European agenda to extend the purview of the law. I am only sorry that my hon. Friend the Member for Henley (Mr. Johnson) is not in Committee at present, because he certainly waxed lyrical in the debates on the European Union arrest warrant in European Standing Committee B, as the Minister will recall. 
 It is thus left to me to make the case that in the light of subsection (1)(a) and (b), it would be helpful to add: 
''Nothing in this section may be construed to permit investigation of matters which do not constitute offences within the United Kingdom.''
 I shall listen with interest to what the Minister has to say. I hope that he will put on the record the fact that he does not want the Bill to be a further extension of the arguments that he advanced during our debates on the EU arrest warrant.

Bob Ainsworth: I can reveal to the hon. Gentleman that the reason why my speaking note is so long is that there are about three different versions of it, depending
 on what on earth he is trying to get at. Obviously, my officials do not have the same mindset that some of us are only too well aware of, with the fear of foreigners and foreign jurisprudence, particularly when it comes to Europe. Such matters invade all the aspects of some of the issues that certain hon. Members feel obliged to raise in all corners of this place.

Nick Hawkins: The only thing that surprises me is that the Minister, having gone through all the problems that the Government had when they did not produce the right documents, should have seen immediately when the amendment was tabled precisely what we were getting at. Never mind his officials, he should have worked that out.

Bob Ainsworth: Nobody else in Committee knows what the hon. Gentleman is talking about. I certainly do not feel obliged to explain it.
 Amendment No. 484 would insert a new provision in the Bill that would make it clear that nothing under clause 320 could be taken to authorise the investigation of matters not constituting offences within the United Kingdom. The clause is about the interpretation of part 6. Subsection (1) defines criminal conduct for the purposes of clause 311 and for the purposes of the definition of criminal property under clause 320. 
 Under clause 311, criminal conduct is relevant to the gateway criterion to be satisfied in order for the director to exercise his income tax, capital gains tax and corporation tax functions. He must have reasonable grounds to suspect that there is a tax obligation arising from the criminal conduct. The definition of criminal property under clause 320 is relevant to the gateway criterion. I am talking about criminal activity and the British tax system. The hon. Member for Surrey Heath will be hugely pleased to hear that if criminality has occurred in another European country, that does not preclude us from using the powers under the Bill. I am sure that he would want that to be the case.

Nick Hawkins: I am grateful to the Minister for part of what he said. We would not want to avoid the United Kingdom authorities having the right to deal with matters that are properly regarded as criminal under our courts. I do not want to bore Committee members, but he will remember our extensive debate when we discussed the EU arrest warrant about generic terms being used in the European directive that is the background to the warrant proposals. That encompasses phrases that are not known under United Kingdom law. I am not wildly suspicious of foreigners as the Minister accused me of being, but I want to have the same certainty under our law as we have always had traditionally, and not vague terms. If I recall correctly, one of them was something like ''xenophobia'', while another was ''swindling'', or some such generic term. Swindling might incorporate specific offences, but in this country we have always fought against the inclusion of generic, sweeping terms and concentrated on specific offences. We and our courts are comfortable with that, and I feel strongly that we should retain it.
 My hon. Friend the Member for Cities of London and Westminster (Mr. Field) has concerns on behalf of businesses in his constituency in that regard, and I know that the City of London was worried about the use of such generic terms in relation to the EU arrest warrant proposals. That led, in part, to some of the great media interest in the matter, to which we shall return on future occasions on the Floor of the House, as the Home Secretary has given an undertaking that primary legislation will be introduced in that regard. At this stage, however, I am happy with the Minister's reassurance that we are dealing with UK tax law only. Anyone who has concerns in the future will no doubt be able to rely on the record of what he has said in Hansard.

Mark Field: Committee members who have read about my background in this week's edition of The House Magazine in which I was the featured Member of Parliament—in the absence of my hon. Friend the Member for Henley, I can say that that publication is almost as exciting as The Spectator—will know that my mother is German. Not all Conservatives are wild anti-Europeans. Equally, and rightly, we are concerned about the potential effect of the EU arrest warrant. My hon. Friend the Member for Surrey Heath made points aptly in that regard. We may not need a fully fledged amendment, but the words of the Minister would suffice.

Bob Ainsworth: What on earth does the amendment have to do with the European arrest warrant?

Mark Field: I suspect that it was one of those late-night or early-morning amendments that were tabled to try to confuse the Minister or, dare I say it, to cause his civil servants to have even more grey hairs. I am surprised that there are only three versions—I was expecting considerably more permutations on which the Minister would have to speak.
 It is legitimate to ensure, at least, that if the EU arrest warrant were extended in relation to a raft of new offences, only offences that were criminal offences in the UK would be included, even if they had been committed abroad. That would be sensible. The Minister has provided a certain amount of comfort to my hon. Friend, who will no doubt have the final say on the matter.

Nick Hawkins: I certainly welcome the contribution of my hon. Friend, who has reinforced our concerns. Although I would emphasise that the amendment relates directly to the EU arrest warrant, it was not simply an exercise in trying to cause more grey hairs for the Minister's civil servants. In the light of his reassurance, however, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Dominic Grieve: I beg to move amendment No. 485, in page 185, line 20, leave out from 'indirectly)' to end of line 22.
 Subsection (4) states: 
''Property is criminal property if it constitutes a person's benefit from criminal conduct or it represents such a benefit (in whole or part and whether directly or indirectly), and it is immaterial—
(a) who carried out the conduct;
(b) who benefited from it.''
 The amendment would remove the words, 
''it is immaterial—
(a) who carried out the conduct
(b) who benefited from it.''
 Two issues arise from that. First, the words appear to be otiose. I do not understand what they add to the clause. On the face of it, the clause is understandable, straightforward and comprehensible without their inclusion. What would be the effect of their removal? 
 The second issue goes a little further, and I would like enlightenment on it. Clearly, the trigger for the director's involvement is criminal conduct, which we discussed earlier. However, I infer that persons possessing property must have committed criminal conduct in relation to that property before they could be taxed on it. The mere fact of possessing property that has a criminal origin does not mean necessarily that one has committed an offence that would make one liable to taxation. That must be the case. 
 Both the wording of the clause and the definition of criminal property are curious. The Minister may be able to explain all that to me without difficulty. Are persons in possession of criminal property liable to taxation only if it is their personal benefit, or if they have committed, or are suspected of committing, a criminal offence in relation to it? I would be grateful for clarification on that, because otherwise the basis of clause 311 seems to unravel and we are dealing with a wider matter than the suspected criminal conduct of an individual.

Bob Ainsworth: The amendment would change the definition in the clause of when property is criminal property. The definition is relevant only to clauses 315 and 316, which make provision for the director's role in cases in which inheritance tax is payable, because the term is not used elsewhere in part 6.
 Under the current definition, property is criminal property if it constitutes a person's benefit from criminal conduct or it represents such a benefit in whole or in part and whether directly or indirectly. Subsection (4) puts it beyond doubt that it is irrelevant who carried out the conduct and who benefited from it. It is, in effect, the same provision that is applied in clause 311 to the income and gains covered by that clause, but adapted to the language of inheritance tax. 
 The revised definition would remove the reference to its being immaterial who carried out the conduct and who benefited from it. It would not, however—the hon. Gentleman is right—remove the reference to a person's indirect benefit from criminal conduct. 
 It is not clear that removing the reference would necessarily prevent the director from exercising his inheritance tax functions in cases in which the person who is taxed did not commit the criminal conduct. However, an undesirable element of doubt could arise if the suggested text were deleted. 
 We intend for the director to be able to exercise his taxation function in any case in which he has reasonable grounds to suspect that the criminal conduct or criminal property test is satisfied. The director will determine whether that would contribute to the reduction of crime in particular circumstances. In cases in which the person liable to be taxed is not suspected of involvement in criminal activities, it is unlikely that the director would, in most cases, exercise his taxation functions. In those circumstances, I ask the hon. Gentleman to withdraw the amendment.

Dominic Grieve: I am grateful to the Minister. He has helped to clarify the matter. I am also grateful for confirmation that deleting half of subsection (4) would not make a big difference.
 The wider issues still trouble me slightly. Let me take an example. I find it difficult to think of concrete examples for part 6, although I always try to apply my mind to the Bill in that way. Let us imagine a godfather figure who has large quantities of assets that are suspected to have been acquired as a result of criminal conduct. He dies and the inheritance tax falls due on his estate. There is no difficulty in that example because the suspected criminal conduct is that of the person who is dead, and it is his estate that falls liable to taxation. However, he may have made inter vivos gifts that would fall into the hands of another person, who would be expected to declare any gift to the Revenue if it was taxable. That person may not be suspected of any criminal conduct. I hope that the Minister understands my point. 
 When we discussed clause 311, it was emphasised that we were talking about the director intervening when an interest had accrued 
''as a result of the person's or another's criminal conduct''.
 Those were the only circumstances in which he could intervene and take over the board's functions. Clause 320(4) introduces the concept of criminal property that may be in the possession of someone who has not committed any criminal conduct. That is why I was interested to probe the issue. It seemed a departure from the principle set out in clause 311. 
 The Minister has partially reassured me on the issue, but—and I emphasise that I do not know the answer to my question—I remain slightly perplexed about the example of, for instance, an inter vivos gift. Money might pass to a person who has not committed any criminal conduct, and it might be thought that the money should be taxed. Even if the money were not declared to the Board of Inland Revenue, it would still be the board's responsibility, because the director's responsibilities do not impinge on breaches of tax law, as the Minister explained. The responsibilities relate only to breaches of the wider criminal law, in which he may intervene. 
 I am sorry if that is muddling to the Minister. In fact, it is muddling to me. His officials seem to have cottoned on to that. I wonder whether ''criminal property'' constitutes a distinct category. People who are not suspected of any criminal conduct may be taxed. That is the best way that I can put the matter to the Minister, who seems to have received a message 
 from someone who may have understood what I am trying to say.

Bob Ainsworth: I am convinced that the hon. Gentleman never sleeps. I am fascinated by the pleasure that he gets when he is satisfied that he is right about the way in which the Bill works, and about whatever it is that he stumbled across at 2 o'clock yesterday morning, or over the weekend.
 If a person has not been involved in criminality, the director will not as a matter of routine become involved. The issue will involve his taxation powers only when it has passed down the hierarchy, having been passed to him because some criminal activity had been pursued. He will be involved only if various investigations have been undertaken as to whether criminal confiscation or civil recovery can be used, and whether a tax liability has been avoided. That is self-evident. 
 Part of the director's function is to reduce crime. We do not want to punch a hole in the director's abilities, and there is therefore no intention of departing from the principle in clause 311, whether it involves inheritance tax, income tax or another tax liability. The person who is taxed needs to be shown to have committed the criminality. I do not know whether the hon. Gentleman is confusing himself; he is to some extent confusing me. I do not believe that I shall have satisfied him on all the issues that he raised.

Dominic Grieve: I am very grateful to the Minister, who has substantially answered my question. It was always my understanding that the wording of clause 311 governs the whole of part 6: it identifies when the director can take over Inland Revenue functions. I merely highlight that there might be an inconsistency in the wording of clause 311 in the case of an inter vivos transfer of assets within the seven-year period to a person who has not committed a criminal offence but whom the director wants to investigate for taxation purposes. In such circumstances, the wording of clause 311 might preclude his doing so. That is my late-night anxiety. I have shared it with him; it can now be his anxiety to share with his officials. I shall not trouble the Committee further.

Bob Ainsworth: I seem to have satisfied the hon. Gentleman without realising it.

Dominic Grieve: I shall be very interested to discover whether the Minister subsequently writes to me about the matter. Whatever the outcome, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Bob Ainsworth: I beg to move amendment No. 283, in page 185, line 23, leave out 'or a pecuniary advantage'.

Bill O'Brien: With this it will be convenient to take Government amendments Nos. 284 to 288.

Bob Ainsworth: The amendments change the definition of property in parts 6 and 7 in order to make it clear how a pecuniary advantage constitutes benefit from criminal conduct. They bring consistency to the way in which pecuniary advantage is dealt with under the Bill and ensure that parts 6 and 7 apply to a pecuniary advantage that has been obtained through
 criminal conduct in the same way as to other criminal property. Without the amendments, it might be argued that the definition of criminal property in parts 6 and 7 does not apply to pecuniary advantage. That would mean that assets obtained through evasion of excise duty, for example, would not be liable to inheritance tax under part 6 and that it would not constitute an offence under part 7 to launder such assets. That would create a serious loophole in the Bill. I hope that that explains why the amendments are necessary.

Nick Hawkins: When I read the words in the Bill as originally drafted, I was reminded of debates and changes in the law that would have been discussed in the House at the same time as my hon. Friend the Member for Beaconsfield and I started our careers at the Bar. They related to some of the offences under the Theft Act 1978, as my hon. Friend will remember—it was probably before the hon. Member for Wellingborough was called to the Bar—and whether it was necessary to amend the Act to remove phrases such as ''pecuniary advantage'', which had been redefined by case law. All kinds of new formulations were introduced through revisions to that Act in subsequent legislation.
 I went through that thought process when I saw the original draft of the Bill. The Minister is now proposing to take those words out again: he claims that if he does not amend the Government's original draft, other serious problems will arise. He says that taking out those words has implications with regard to whether certain activities are regarded as offences in parts of the Bill that we have yet to reach. I do not understand the logic of that. 
 Perhaps the Minister will receive a briefing that says that, ''If pressed''—ministerial briefings often provide extra arguments for such a contingency. I eagerly await his response, because I am not persuaded by his argument on the matter: I do not see that it follows that if those words are left in, problems will arise in part 7.

Bob Ainsworth: I am sorry, but I do not understand what the hon. Gentleman is concerned about. The changes are obvious, and even if my explanation is unsatisfactory, I have nothing further to add.

Nick Hawkins: Let me explain to the Minister where I am coming from, as it is possible that I misunderstood his explanation.
 Subsection (5) states: 
''A person benefits from conduct if he obtains property or a pecuniary advantage as a result of or in connection with the conduct.''
 That is clear: everything seems to follow naturally and logically. However, it appears that the Minister is now saying that, unless ''or a pecuniary advantage'' is taken out, problems will arise in a part of the Bill that we have yet to reach. I do not understand that.

Bob Ainsworth: Is the hon. Gentleman ignoring the changes in the other amendments? Proposed new subsection (5A) states:
''If a person obtains a pecuniary advantage as a result of or in connection with conduct, he is to be taken to obtain as a result of or 
in connection with the conduct a sum of money equal to the value of the pecuniary advantage.''.
 There is not only an omission from the Bill but an addition to it. He is suggesting that we are simply removing the words, but that is not the case.

Nick Hawkins: I am not suggesting that. Perhaps this is where the misunderstanding arises. I am saying that proposed new subsection (5A) is more confusing than the original draft of the two subsections in question.
 Government amendment No. 284, which proposes new subsection (5A), is confusing and circular. However, if the Minister does not accept my point, he will no doubt press for his revised wording.

Bob Ainsworth: He will.
 Amendment agreed to. 
 Amendments made: No. 284, in page 185, line 24, at end insert— 
'(5A) If a person obtains a pecuniary advantage as a result of or in connection with conduct, he is to be taken to obtain as a result of or in connection with the conduct a sum of money equal to the value of the pecuniary advantage.'.
 No. 285, in page 185, line 28, leave out 'or pecuniary advantage'.—[Mr. Bob Ainsworth.] 
 Question proposed, That the clause, as amended, stand part of the Bill.

Dominic Grieve: I hope that the Minister will forgive me, but while my hon. Friend was dealing with the subsequent amendment, I read part 6 again, and I concluded that I now understand why subsection (4) is worded in the way that it is. I think that the Minister has been properly advised, and the misunderstanding under which he and I were perhaps both labouring might have been due to the fact that, at the start of the
 debate, the emphasis was on clause 311 and the circumstances of criminal conduct that could give rise to the intervention of the director. That made me think that the matter under discussion governed the totality of part 6, whereas it clearly governs only the question of income tax. The question of inheritance tax is discrete under clause 315. In those circumstances, criminal property can be much wider than the person who has committed criminal conduct. That means that individuals who have not committed a criminal offence may find themselves investigated under the inheritance tax provisions and taxed because they are in possession of property that is criminal property. I think that I have now understood the provision. I am sorry if I muddled the Minister. I will try discreetly after our sitting to ascertain whether I have got the matter right.

Alistair Carmichael: Will the Minister explain the scope of subsection (1)? The definition of criminal conduct seems exceptionally wide. It seems that criminal conduct will include conduct that might be an offence in Scotland, say, but not in England. Furthermore, such conduct could be covered under the definition of criminal conduct if the conduct itself were committed in England, not in Scotland. Can he clarify that point?

Bob Ainsworth: I doubt it. I will write to the hon. Gentleman about it.
 Question put and agreed to. 
 Clause 320, as amended, ordered to stand part of the Bill. 
 Further consideration adjourned.—[Mrs. McGuire.] 
 Adjourned accordingly at seven minutes past Six o'clock till Thursday 17 January at five minutes to Nine o'clock.